Long Beach Transit officials take heat over buses from China

A rider waits for a Long Beach Transit Passport bus on Pine Ave. in Downtown Long Beach, Calif., on March 21, 2013. The Long Beach Transit Board is reviewing a $12.1 million contract to buy 10 electric buses from a Chinese company, BYD Motors, Inc. (Jeff Gritchen / Staff Photographer)

LONG BEACH — Long Beach Transit leaders Friday will revisit a controversial $12.1 million contract to buy 10 electric buses from a Chinese company - one of the largest federal grants ever awarded for the deployment of electric buses.

The board delayed its decision to award the contract to BYD Motors, Inc., after being challenged by a South Carolina firm also vying for the contract and others over why the transit agency would select a Chinese company over an American one.

In a 16-page letter to Long Beach Transit, Marc Gottschalk, chief business development officer and general counsel of Greenville, S.C.-based Proterra, described BYD as a company with "a history of overpromising and under-delivering."

Gottschalk wrote that his company was surprised that transit staff recommended awarding the "scarce federal grant and local dollars" to a Chinese company "that has presented a bus that has virtually no U.S.-made content, has no U.S. manufacturing (and) has no buses in revenue service in the United States. "

He added that it has yet to undertake required U.S. durability and reliability testing at the Bus Research Testing Center in Altoona, Penn.

"Long Beach Transit has at its disposal the second largest federal grant ever awarded for the deployment of electric buses - that it would go to a Chinese company that 'plans' to complete Altoona testing and 'plans' to build a U.S. manufacturing plant and 'plans' to be Buy America compliant someday in the future and has a record of making false and unreliable public statements - is unfathomable," Gottschalk wrote.

Advertisement

Micheal Austin, vice president of BYD America, dismissed Proterra's letter, saying that Proterra had no right to speak to BYD's buses.

"This is clearly a smear tactic," Austin said. "I don't think Proterra's general counsel has any credibility in speaking about BYD. "

Austin said BYD has more than 180,000 employees and has put more than 1,000 buses in service in the last three years. He added that BYD has buses that have passed numerous tests in China, and that the company has already scheduled Altoona testing on the bus being proposed in Long Beach. Altoona, he also said, is not a pass or fail test, but just a report card of a bus' robustness.

"BYD has far more experience with electric buses than any other competitor, Proterra included, and has far more experience designing buses, shipping buses and building buses than Proterra ever could," Austin said. "This is an act of desperation. "

For weeks, competition has been heating up over a contract issued by Long Beach Transit to purchase 10 all-electric buses using money from the Federal Transit Administration, which is looking to fund advancements in zero-emissions technology and has money set aside in its Transit Investment for Greenhouse Gas and Energy Reduction program for the development of that technology. Right now, most U.S. buses run on diesel or compressed natural gas, or CNG.

The use of electric buses is the next step in the evolution of bus transit. Operations, maintenance, battery and equipment costs, however, are still unknown since much of this technology is still in its infancy, said Long Beach Transit president and CEO Larry Jackson, whose agency serves 28.2 million customers in Long Beach, Lakewood, Signal Hill and parts of surrounding areas.

"We want it to work and we want to use it in everyday service, but there's a lot of different approaches in terms of how do you charge it, and other transit systems in the country are (looking into) the same thing," he said. "It's an industry just starting to form and everyone wants to do it, but not many are producing vehicles, particularly in the U.S. "

Long Beach Transit secured about $12.1 million in mostly federal funding toward a pilot program that would test these experimental buses along the downtown Passport route - a short, enclosed circuit that makes stops at the Queen Mary, the Aquarium of the Pacific, the Long Beach Convention and Entertainment Center and various points up and down Pine Avenue.

When transit staffers recommended BYD over Proterra, some criticized the decision, including U.S. Rep. Alan Lowenthal, D-Long Beach. In a March 8 letter, Lowenthal applauded Long Beach Transit's ability to secure the federal funding, but also questioned the decision to not hire an American company to do the work.

"Although the choice of all electric vehicles is a positive step and should be a point of pride for Long Beach, outsourcing to manufacturing to China raises serious concerns," Lowenthal wrote. "I would hope that the transit board would reconsider purchasing American-made alternatives, such as those currently being used by local transit authorities like Foothill Transit. It is important to consider that helping the American economy and American workers is as important as helping the environment. "

Austin and transit officials defended the staff's selection. Austin said that BYD is a publicly-traded company on the Hong Kong Exchange in which about half its shares are owned by U.S. entities, including Warren Buffett, the company's largest shareholder.

Austin added that BYD Motors and BYD America are U.S. subsidiaries and that BYD has satisfied all of Long Beach Transit's requirements, which include building the buses in America.

BYD is planning to build a manufacturing facility in California to build electric buses, including the ones bound for Long Beach, Austin said. He declined to say where the facility would be located because BYD is currently negotiating lease terms.

"What's ironic is that these jobs being created to build these buses are California jobs," Austin said. "BYD could have opted to go to Greenville, South Carolina, like Proterra did, or opted to go to North Carolina, where DesignLine went. We could be in Canada, where New Flyer went. These are all competitors. But we choose California. We're committed to California. These are California jobs that are being created to build California buses. "

The Long Beach Transit board will meet today in its second study session to discuss the contract, and could vote on it as early as Monday, the next time the board meets.

But Barbara Sullivan, chairwoman of the Long Beach Transit Board, said this week the board does not intend to hastily decide on the contract until it has more information.

"That's why we're having the two study sessions," she said. "We wanted to fully understand what was included in the decision and also understand the whole nature of the electric bus phenomenon around the world. "

As for the politics surrounding the contract, Sullivan said: "My thoughts are really around selecting the best solution for the company and for our customers. And I know stuff gets to be political and that's the nature of the world, but that's not part of our decision. Our decision is to become informed and to make the best solution we can based on what we feel our needs are. "

The Long Beach Transit will meet at 1 p.m. at the transit company's Operations Training Room, 6860 Cherry Ave. Visit lbtransit.com for more.